Coleman & Horowitt has one of the premier intellectual property and technology law practices in California. The firm provides a wide range of services for the protection of the intellectual property of our clients. We have expertise in technology law, online defamation, defense, and Section 230 matters, start ups, and other issues facing start-ups.

Monday, October 19, 2015

My first patent was number 6,756,879 and my 150th was patent number 9,166,974 -- meaning 2.41 million patents issued between my first and my 150th. To get a sense of the accelerated rate of innovation in recent years, it is worth pointing out that more than 25% of all US patents ever issued have issued in the mere 11 years that passed since my first one issued in 2004.

Friday, October 9, 2015

This agreement addresses how member nations deal with trademarks, copyrights, utility patents, plant patents, drug and medical patents and drug approval, and trade secrets. I'm sure in the coming days we'll see a lot of analysis as to how these changes will impact IP law.

Monday, September 28, 2015

Eric Goldman blogged about a case where a person purchased a copyright to an unflattering photograph of himself with the intention of using copyright law to make the photograph disappear from the internet. Eric writes "Due to the decisive appellate ruling and the district court’s stinging rebuke and fee-shift, the results of this lawsuit should deter other people from buying up copyrights to manufacture a right to forget."

Copyright law is different from patent law in one critical respect: There is no (normally) no First Amendment right to practice an invention, whereas there is a First Amendment right to publish specific expressions of ideas, even verbatim, for certain purposes. As a result, the Copyright Act provides a four factor test (nature of use, nature of work, amount of work copied, marketplace impact) that functionally creates an exception large enough that copyright law and First Amendment law can co-exist.

The other part of the case that Eric blogged about is the implied public policy issue. Eric writes that "copyright law principally serves as an economic policy by protecting creators' ability to recoup the investments they make in generating new works that have value to society." I agree with Eric's implication that what made this an easy case to decide was that the copyright holder was using copyright law to censor, rather than enhance, the body of work available to the world.

Put another way, the basis of all copyright and patent law is found in Article 1, Section 8, Clause 8 of the Constitution and grants legislative power to Congress as as follows: "To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries".
So there it is. I suspect that a constitutional argument, rather than a statutory one, would also have prevailed against an effort to bury content using copyright law -- burying content does not "promote the Progress of Science and useful Arts". This is an even more powerful constitutional argument when the First Amendment is considered.

The argument is significantly weaker when it comes to patent law, because preventing use of a technology under patent law can be used to promote technological progress. For example, if I held a patent that covered varying internet connection speed based on the sender, I could insist on net neutrality simply by seeking injunctions against anybody who favored some senders over others. Of course, this is made all the more complex by the Supreme Court's decision to make injunctive relief harder to obtain in patent cases. Nonetheless, I suspect that at some point, courts will face the question of whether it is unconstitutional (or patent misuse) to use a patent, with no economic benefit to the patent holder, to simply prevent a disliked technology from being used at all.

Tuesday, September 22, 2015

There is a common misconception that an inventor or author can protect their intellectual property by mailing a copy of it to themselves. These are sometimes called a "Poor Man's Patent" or "Poor Man's Copyright". I will address each in turn (note: IP law varies greatly from country to country; I am writing only about the United States).Poor Man's Patent:What is a "Poor Man's Patent"? As an ehow.com article describes it, "a poor man's patent is simply, just a postcard you send through the United [States] Postal Service. Just print a copy of the product you designed on it. Address the postcard to your self [sic]. Once it comes back stamped by the postal service it is a 'Poor Man's Patent.'" The article takes it one step further, suggesting that a "better way to get a patent is to go to Lulu.com. Download a picture of your product. Then make a calendar, T-shirt, coffee mug whatever they offer. You design what [it] is you want and printed on it copyrighted by your name and date. You pay for it. Then Lulu.com sends your design on the product you chose, this is a legitimate patent plus it is copyrighted and no one else can steal it." Do not under any circumstances attempt to "patent" something this way. It doesn't work. The Chicago Tribune nailed it in a 1985 article: a "poor man's patent [is a] term most appropriate in the sense that the inventor who relies on such protection is virtually assured of remaining a poor man."

To understand why this approach is totally ineffective, we must first understand what a patent is. A patent is not the right to do anything. If I had a patent on a better way to break into bank safes, I would not then have the right to break into bank safes. Instead, a patent is the right to exclude others from practicing a patented invention, and to obtain damages in court if somebody does practice a patented invention without permission.

These rights only arise in the US once specific claims are issued by the US patent and trademark office. Before the 2011 America Invents Act, the United States awarded patents to the first person to invent, even if somebody else beat them to the patent office. Under this old regime, there was a tiny benefit to mailing an invention disclosure to yourself -- it helped established an invention date. Even this benefit is now gone, as the America Invents Act changed US patent law so that the patent is awarded to the first inventor to file for a patent, regardless of who invented first (with lots of caveats, see a lawyer for details).

In fact, even hiring a patent lawyer and filing a patent application is not a patent (a "rich man's" patent?). The only way an invention is protected under the patent system is by making it through the patent process successfully (and thanks to the America Invents Act, surviving the likely post-grant administrative challenges).

Somebody using the (ineffective) "poor man's patent" approach may also be attempting to allow themselves to continue to practice an invention even if somebody else later invents and patents it (old rules) or later files for and gets a patent (new rules). If somebody doesn't mind making their invention public and possibly preventing themselves from ever getting a patent on it, the most effective way to do this is to publish a thorough description of what they are doing in a public forum. This would then constitute "prior art" and prevent issuance of a valid patent covering that technology (patent office error could result in issuance of a patent, but it wouldn't be valid over prior art if done right). This also triggers real threats to the inventor's later attempts to get a patent ("on sale" bar for example), and should not be done lightly.

The bottom line is that there are really three patent issues the "Poor Man's Patent" raises, two of them highly related:

(1) Can I legally prevent somebody from doing what I invented?

Answer: Only by getting an issued patent. There is no shortcut -- although if you keep it as a trade secret there may be some benefit, but that's really something that a lawyer needs to advise on.

(2) Can I keep doing what I'm doing?

Answer: This is a freedom to operate question, and even the best patent lawyers in the world can only get to "pretty sure" on this one in most cases. There are millions of valid patents globally, and attempting to answer the question without a strong legal team is just asking for patent litigation.

(3) Can I stop somebody else from getting a patent on what I'm doing?

Answer: If you publish your invention in a public forum, it is usually going to serve as prior art and prevent issuance of a valid patent -- with some wrinkles that a patent lawyer should expand on if you're really contemplating this.

An inventor who is cash poor does have an option: There is a "poor man's patent application" -- the provisional patent application. It can be filed with or without a lawyer, and costs $65, $130, OR $260 (depending on entity status - microentity, small entity, or large entity, excluding attorneys fees). This application will never mature into an issued patent without filing a proper utility patent application within a certain time frame (a year usually, although it can be shorter in some circumstances, such as when claiming priority to multiple provisionals). Note that the rules for patents other than "utility patents" differ.

There is some dispute in the patent community as to whether simply filing source code as a provisional patent application is beneficial -- my opinion is that there are some cases where it may be appropriate. Let's be clear, though: Saving money on a patent application up front strongly reduces the chance of getting a valid and valuable patent at the end. This is particularly so given the changes happening in patent law. A provisional patent application protects only the content of the application, and if you leave something out, that can be a problem later.

While some materials, like the ehow article referenced above, are clearly and obviously wrong in some material ways, even well researched materials -- even recent court cases -- can become wrong or misleading very quickly. Any reference materials more than a few months old should be assumed invalid as to at least some points. The law is changing that rapidly (a big case came down last week from the Federal Circuit on a 6/5 vote about whether delay in enforcing rights waives patent damages). The speed of change is such that relying on anything other than a lawyer (or, if you can't afford one, at least careful reading of current USPTO materials) is likely to lead to mistakes.

One advantage of Fresno I've found as an inventor is that there is at least one excellent patent lawyer (the one I use), and I suspect there are others. Moving my patent work from two large LA law firms to her in Fresno has resulted in large cost savings (Fresno is simply a better priced legal market) and there has been no compromise on the quality of the work.

Given the pitfalls of going it alone on patents and the more than competitive rates we can get in Fresno, it is my strong opinion that using a licensed patent lawyer (or patent agent -- though I don't know if we have any in Fresno) is critical to any invention-driven startup.

Side note: Ironically, what would have provided at least some benefit, compared to the "why would people think this is effective at all" self-mailing method, would have been to sign an NDA with a witness or notary public, have them sign and witness the actual document, then seal it or not, who cares. This would have established an invention date with proof of invention, which under the old "first to invent" regime would have given the inventor priority over an earlier-filed but later-invented invention assuming the inventor timely files for a patent. Under the new first to file regime, this wouldn't work.

The bottom line is that patents are expensive. Using a lawyer local to Fresno makes them far less expensive, but patents are still not cheap to acquire. There is simply no way to get patent protection in the US without going through the patent office. Anybody who tells you otherwise is wrong. The real alternative to a patent is treating the invention as a trade secret, but that comes with its own set of risks and benefits and should not be done without the advice of counsel.

The Poor Man's Copyright:

A related myth to watch out for is people "copyrighting" things by putting them in an envelope and mailing it to themselves. It may provide proof of date, but that is easier to do by just getting a notary public, and far more likely to be legally accepted as proof. Moreover, things are copyrighted as soon as they are created in fixed and tangible form. You don't need to do anything to get a copyright in your work. The doodle you drew while talking with your friend yesterday was copyrighted as soon as you drew it.

There are three levels of copyright protection in the U.S. (the first two levels differ only in terms of how the creator documents the creation date, so they differ in functional but not legal terms):

(1) You create a work, and it is automatically copyrighted with nothing further required on your part;

(2) A work you created and which you documented in a way that allows you to prove date of creation (thereby helping you to win a case if somebody copies your work and later claims that it was you who copied their work); and

(3) A registered copyright.

People don't understand the difference between copyright and a registered copyright. A registered copyright comes with the right to statutory damages and attorneys fees. Registration is cheap and easy, but is done with the US Copyright Office.

Just like with patents, writing something down and putting it in an envelope to "copyright" it is effective as a way of wasting a stamp and little more. Proof of creation date is far better established in other ways, and in any event is a poor second to actually registering the work. Unlike patents, most copyright registrations can be done equally well by a non-lawyer as by a lawyer, although for mission critical things like a novel, at least running it past a lawyer isn't a bad idea.

Thursday, August 27, 2015

There is a complex relationship between intellectual property protection and money.

Many venture capital sources and angel investors will not invest without some kind of assurance or plan to reduce the risk that a big company will see what you are doing, swoop into your space, and use their money and market dominance to take your business.

Copyright is free and automatic (and registration costs a de minimis amount), but in most cases it would be a trivial task for one of the tech giants to write software from scratch providing the same functionality as yours does. By contrast, a patent protects functionality.

Let's take a look at a startup from 1998 -- Google. In 1998 when Google landed an initial $100,000 angel investment, it was patent pending on application 09/004,827, "Method for node ranking in a linked database" -- their basic search algorithm. On June 7, 1999, Google landed $25 million in equity investment -- two months before their patent application's August 26, 1999 first office action, a non-final rejection by the patent office. In a very typical history for patent applications, the rejection was eventually overcome and the patent was allowed on April 23, 2001 and issued on August 16, 2001.

The bottom line for Google is that they paid for a provisional patent application (filed Jan. 10, 1997) and a utility patent application (filed January 9, 1998) before they landed any substantial investment. Google was able to say they were "patent pending", and investors were able to evaluate the patent application and gain a measure of confidence that the then-competing search giants (e.g. Yahoo, DEC's Alta Vista) would not eat Google's lunch by stealing their algorithm. While the actual role of the patent application in Google's funding is something we can speculate about, the fact is that they followed a solid path to getting funding: Take steps to protect your intellectual property first, then seeking funding.

At this point, many potential start-ups may be thinking the obvious: "If I need money to pay for a patent application and I need a patent application to get money, what do I do?" There are several pathways that can be followed. A provisional patent application protects the filing date and can be created for $5,000 or less (around $100 if you do it yourself without a lawyer -- something I don't recommend). A bare bones utility application would cost around the same. It is definitely worth talking with a patent lawyer to get options and estimates (as well as advice as to how to approach family and friends for the initial $10,000 to protect the IP without putting the IP at risk in discussing it before filing).

Thursday, July 9, 2015

In the recent case of Multi Time Machine, Inc. v. Amazon.com, the 9th Circuit Court of
Appeal reversed the District Court’s summary judgment in favor of online
retailer Amazon.com (“Amazon”) in a trademark infringement action brought by
Multi Time Machine, Inc. (“MTM”) under the Lanham Act. The Court held that a jury could find that
Amazon had created a likelihood of confusion under an “initial interest confusion”
theory by responding to search requests for MTM Special Ops watches by showing
MTM’s trademark three times above the search results, and displaying similar
watches manufactured by MTM’s competitors beneath.

Facts:

MTM manufactures, among other things, high-end, military-style
“MTM Special Ops” watches, and owns a registered trademark for “MTM SPECIAL
OPS.” Amazon.com, who claims to offer
the “Earth’s Biggest Selection of products,” does not carry MTM watches.

In its complaint, MTM alleged that Amazon infringed its trademark
by responding to search requests on its website with a results page displaying the
“MTM SPECIAL OPS” trademark three times, above a display of aesthetically and
functionally similar watches manufactured by MTM competitors. Customers could not purchase watches from the
search results page, but had to click through to an Amazon “product detail”
page. On the top of the product detail
page, the customer’s initial query “MTM Special Ops” still appeared in the
search field. Nothing on either of the
pages indicated that Amazon does not carry MTM products. However, the search results of the Amazon website
produces a list, with photographs, of several other brands of military-style
watches that Amazon does carry, specifically identified by their brand
names.

On Amazon’s motion, the District Court granted summary
judgement in favor of Amazon finding that the competitor’s itemized products
were clearly labeled and there was no evidence that Amazon users were likely to
be confused as to the sources of the competing goods.

9th Circuit Analysis:

Trademark infringement occurs when a defendant uses a mark
in commerce in a manner likely to cause confusion as to the source of goods or
services. A defendant can create a
likelihood of confusion, and thereby cause infringement, through a type of
confusion referred to as “initial interest confusion.” Initial interest confusion occurs where a
consumer is confused, not at the time of purchase, but earlier in the shopping
process, if the customer confusion creates initial interest in a competitor’s
product.

The 9th Circuit held that a jury could find that
Amazon had created a likelihood of confusion under the initial interest
confusion theory because users may be confused as to why they only received
search results showing the competitor’s products, and may wonder whether a
competitor has acquired MTM or is otherwise affiliated with or approved by
MTM. The issue is not whether a buyer
may purchase some brand other than MTM (mere diversion is not enough) but,
instead, whether Amazon’s use of the MTM mark would cause initial interest
confusion by attracting potential customers’ attention to buy infringing goods
because of MTM’s hard-won reputation.
“Even though his confusion may be dispelled before an actual sale
occurs, initial interest confusion impermissibly capitalizes on the goodwill
associated with a mark and is therefore actionable trademark infringement.’”

Conclusion:

While the 9th Circuit clearly states that it is
“by no means certain that MTM will be able to prove likelihood of confusion
under and initial interest theory,” there are genuine issues of material
fact. Consequently, the Court reversed
the judgment of the District Court, and remanded the action to the District
Court for further proceedings.

This Blogger’s Reflections:

In some respects, the 9th Circuit appears to be
stretching the bounds of what constitutes actionable infringement by finding a
genuine issue of fact regarding the likelihood of confusion when none appears to exist because MTM’s
competitor’s products were clearly labeled. It seems highly unlikely to this trademark
attorney that sophisticated consumers, making relatively expensive purchases,
would be confused as to the source of the competitor’s watches. If the consumer had doubts as to the source,
the sophisticated consumer would investigate further as to MTM’s status and affiliations,
or at minimum, search other sites for MTM watches.

On the other hand, and in contrast to Amazon’s competitor’s
Buy.com and Overstock.com who both clearly state that no search results match “MTM
Special Ops,” Amazon makes no clear representation, which caused the 9th
Circuit to focus on Amazon’s intent. Because it appears that Amazon is attempting
to capitalize on the goodwill associated with MTM’s trademark, to the detriment
of MTM and, perhaps, Amazon’s competitors, the end result reached by the 9th
Circuit (that the action against Amazo proceeds) may be the fair result. In any case,
MTM will no doubt have a difficult road ahead in attempting to prove consumer
confusion with their competitor's products clearly labeled as such.

Monday, July 6, 2015

Since my astute colleague, Gary Shuster, posted helpful
terminology related to patent “speak,” I thought it might be helpful to have a
similar glossary of terms for trademark terminology. Although trademark law tends to be less
complex than patent law, without a fundamental understanding of the terms
trademark lawyers use, it is easy to get lost in a conversation with a
trademark attorney.

The following glossary of trademark terms is fundamental to
an understanding of trademark law, and in any case, you can impress your
trademark attorney with your grasp of trademark terms and concepts. As with the
patent glossary, this glossary may also grow over time.

Abandonment: A trademark or service mark application that
has been declared abandoned is “dead” and no longer pending. The most common reason for abandonment of a
trademark or service mark application is when the U.S. Patent and Trademark
Office (“USTPO”) does not receive a response to an Office Action (see
definition below) from the applicant within 6 months from the date the Office
Action was mailed.

Acceptable
Identification of Goods and Services Manual: This manual lists numerous examples of identification
of goods and services that are acceptable to the USPTO for inclusion in trademark applications and registrations.

Acquired
Distinctiveness: See Secondary Meaning.

Allegation of Use: A sworn statement signed by the applicant or
a person authorized to sign on behalf of the applicant attesting to use of the
mark in commerce. The allegation of use must include one specimen showing use
of the mark in commerce for each class of goods/services included in the
application, and the required fee.

Amendment to Allege
Use: An Allegation of Use filed
before the Examining Attorney (see below) approves the mark for publication and
prior to issuance of the trademark registration. The Amendment to Allege Use and the Statement
of Use (see below) include the same information, and differ only as to the time
when filed.

Application
(Trademark): A document by which a
person requests a federal trademark registration. To receive a filing
date, an application must include (1) the applicant's name, (2) a name and
address for correspondence, (3) a clear drawing of the mark sought to be
registered, (4) a list of the goods or services, and (5) the application
filing fee.

Assignment: A transfer of ownership of a trademark
application or trademark registration from one entity to another.

Cancellation
Proceeding: A proceeding before the
Trademark Trial and Appeal Board in which the plaintiff seeks to cancel an
existing registration of a mark.

Certificate of
Registration: Official document from the USPTO evidencing that a mark has been registered.

Classification of Goods and Services: Goods and Servicesare classified by
an international system, according to international treaties to which the
United States is a signatory. All goods and services included in trademark
applications are classified by the Office according to this system. Goods are classified in International Classes (IC) 001 through 034, and services are classified in IC 035-045.

Common Law Rights: Property or other legal rights that do not
absolutely require formal registration in order to enforce them. Proving such rights for a trademark in court
can be very difficult, requires meticulous documentation, and places a heavy
burden on the individual. Active Federal
registration of trademark can provide a higher degree of legal protection and
readily-demonstrated evidence of ownership of a mark.

Dead: A dead
or abandoned status for a
trademark application means that specific application is no longer under prosecution within the USPTO,
and would not be used as a bar against your filing.

Declaration of
Incontestability: See Section 15
below.

Descriptive Mark: A mark is considered merely descriptive if it
describes an ingredient, quality, characteristic, function, feature, purpose or
use of the specified goods or services. If a mark is merely descriptive or deceptively
misdescriptive of the goods or services to which it relates, the mark will be
refused registration on the Principal Register under §2(e)(1) of the Trademark
Act, 15 U.S.C. §1052(e)(1).

Disclaimer: A
statement that the applicant or registrant does not claim the exclusive right
to use a specified element or elements of the mark. The purpose of a disclaimer
is to permit the registration of a mark that is registrable as a whole but
contains matter that would not be registrable standing alone.

Examining Attorney:
A USPTO employee who examines (reviews
and determines compliance with the legal and regulatory requirements of) an
application for registration of a federally registered trademark.

Expired Trademark: Trademark registration is no longer active.
The registrant failed to renew the trademark registration at the end of the
registration period.

Fanciful Marks: Terms
that have been invented for the sole purpose of functioning as a trademark or
service mark. Such marks comprise words
that are either unknown in the language (e.g., PEPSI, KODAK, EXXON) or are
completely out of common usage (e.g., FLIVVER).

Filing Basis: The legal basis for filing an application for
registration of a mark. The Trademark Act sets out five filing bases, and an
applicant must specify and meet the requirements of one or more bases before
the mark will be approved for publication for opposition or registration on the
Supplemental Register (see below). The
five bases are: (1) use of a mark in commerce under §1(a) of the Act; (2) bona
fide intention to use a mark in commerce under §1(b) of the Act; (3) a claim of
priority, based on an earlier-filed foreign application under §44(d) of the
Act; (4) registration of a mark in the applicant’s country of origin under
§44(e) of the Act; and (5) extension of protection of an international
registration to the United States, under §66(a) of the Act and the Madrid
Protocol.

Generic Terms: Terms that the relevant purchasing public
understands primarily as the common or class name for the goods or services.
These terms are incapable of functioning as trademarks denoting source, and are
not registrable on the Principal Register (see below) under 2(f) or on the
Supplemental Register (see below). Examples include: CLASSES ONLINE for classes
provided via the Internet, PIZZA.COM for pizza ordering and delivery services,
and LIVE PLANTS for plant nurseries.

Goods: Goods are products.

Identification of
Goods and/or Services: A written
statement of the goods and/or services included in an application. Every
application must include an identification of goods and/or services.

Intent to Use (ITU): Refers to the intent-to-use filing basis
provided for in Trademark Act Section 1(b), 15 U.S.C. 1051(b). Applicants who
have not yet used the mark they wish to register may file a trademark
application under this filing basis. An
"intent to use" application must include a sworn statement (usually
in the form of a declaration) that applicants have a bona fide intention to use
the mark in commerce. International Class (IC): See Classification of Goods and Services above.

Likelihood of
Confusion: A statutory basis
(Trademark Act Section 2(d), 15 U.S.C. Section 1052(d)), for refusing
registration of a trademark or service mark because it is likely to conflict
with a mark or marks already registered or pending before the USPTO. After an
application is filed, the assigned Examining Attorney will search the USPTO
records to determine if such a conflict exists between the mark in the
application and another mark that is registered or pending before the USPTO.
The principal factors considered by the examining attorney in determining
whether there is a likelihood of confusion are: (1) the similarity of the
marks; and (2) the commercial relationship between the goods and/or services
listed in the application. To find a conflict, the marks do not have to be
identical, and the goods and/or services do not have to be the same. It may be
enough that the marks are similar and the goods and/or services related.

Notice of Allowance
(NOA): A written notification from
the USPTO that a specific mark has survived the opposition period following
publication in the Official Gazette (see below), and has consequently been
allowed for registration. It does not mean that the mark has registered yet.

Notice of Publication: A written statement from the USPTO notifying
an applicant that its mark will be published in the Official Gazette (see
below). If the Examining Attorney raises
no objections to registration, or if the applicant overcomes all objections, the
Examining Attorney will approve the mark for publication. The notice of
publication provides the date of publication. Any party who believes it may be
damaged by registration of the mark has thirty (30) days from the publication
date to file either an opposition to registration or a request to extend the
time to oppose.

Office Action: A letter from a trademark examining attorney
setting forth the legal status of a trademark application. There are several
types of Office actions: examiner’s amendments, priority actions, non-final
Office actions, final Office actions, and suspension inquiry letters.

Official Gazette: A weekly publication of the USPTO that
includes regular and special notices of the Office.

Opposition Proceeding: a proceeding before the Trademark Trial and
Appeal Board in which the plaintiff seeks to prevent the issuance of a
registration of a mark. An opposition is similar to a proceeding in a federal
court, but is held before the Trademark Trial and Appeal Board, a USPTO
administrative tribunal. An opposition may only be filed in response to the
publication of the mark in the Official Gazette.

Principal Register: Primary trademark register of the USPTO.
When a mark has been registered on the Principal Register, the mark is entitled
to all the rights provided by the Trademark Act. For a listing of the advantages of owning a
registration on the Principal Register see “Registration” below.

Publication for
Opposition: If the examining
attorney raises no objections to registration, or if the applicant overcomes
all objections, the examining attorney will approve the mark for publication in
the Official Gazette.

Registration: Federal registration of trademarks involves
the establishment of rights in a mark based on legitimate use of the mark.
Although federal registration of trademarks is not required to use a trademark,
owning a federal trademark registration has several advantages, including
notice to the public of the registrant's claim of ownership of the mark, a
legal presumption of ownership nationwide, the exclusive right to use the mark
on or in connection with the goods or services set forth in the registration,
the ability to bring an action concerning the mark in federal court, the use of
the U.S. registration as a basis to obtain registration in foreign countries,
and the ability to file the U.S. registration with the U.S. Customs Service to
prevent importation of infringing foreign goods.

Request for Extension
of Time to File a Statement of Use:
A sworn statement signed by the owner or a person authorized to sign on
behalf of the owner, stating that the applicant still has a bona fide intention
to use the mark in commerce, and needs additional time to use the mark in
commerce. A filing fee per class of
goods/services must accompany the Extension Request.

Section 8 Declaration
of Continued Use: A sworn statement,
filed by the owner of a registration that the mark is in use in commerce. It must be filed by the current owner of the
registration and the USPTO must receive it during the following time
periods: (1) At the end of the 6th year
after the date of registration, and (2) At the end of each successive 10-year
period after the date of registration. There is a six-month grace period. If
these rules and deadlines are not met, the USPTO will cancel the registration.

Section 9 Renewal
Application: A sworn document, filed
by the owner of a registration, to avoid the expiration of a registration. Federal trademark registrations issued on or
after November 16, 1989, remain in force for 10 years, and may be renewed for
10-year periods. Trademark registrations
issued or renewed prior to November 16, 1989 remain in force for 20 years, and
may be renewed for 10-year periods. Trademark
owners have a total of 18 months to file a §9 Renewal Application. The §9
Renewal Application may be filed one year prior to the registration expiration
date or during the 6-month grace period immediately after the date of
expiration. If the §9 Renewal Application is not filed or is filed after the
grace period ends, the registration will expire.

Section 15
Declaration of Incontestability: A
sworn statement, filed by the owner of a mark registered on the Principal
Register, claiming “incontestable” rights in the mark for the goods/services
specified. An “incontestable”
registration is conclusive evidence of the validity of the registered mark, of
the registration of the mark, of the owner’s ownership of the mark and of the
owner’s exclusive right to use the mark with the goods/services. Filing a Section 15 Declaration is optional.
However, there are certain rules governing when one may be filed. A §15
Affidavit may not be filed until the mark has been in continuous use in
commerce for at least five consecutive years subsequent to the date of
registration. The §15 Affidavit must be
executed and filed within one year following a 5-year period of continuous use
of the mark in commerce.

Service Mark: A word, name, symbol or device that is used to
indicate the source of the services and to distinguish them from the services
of others. A service mark is the same as a trademark except that it identifies
and distinguishes the source of a service rather than a product. The terms
"trademark" and "mark" are often used to refer to both
trademarks and service marks.

Secondary Meaning
(aka Acquired Distinctiveness): A doctrine of trademark law that provides that
trademark protection is afforded to the user of an otherwise unprotectable mark
when the mark, through advertising or other exposure, has come to signify that
a product or service comes from a single source.

Specimen: A real-world example of how the mark is
actually used on goods or in the offer of services. Labels, tags, or containers for goods are
considered to be acceptable specimens of use for a trademark. For a service
mark, specimens may be advertising such as magazine advertisements or
brochures. One specimen is required for
each class of goods or services specified in the trademark application.

Statement of Use
(SOU): An Allegation of Use filed
after issuance of the Notice of Allowance.
The Amendment to Allege Use and the Statement of Use include the same
information, and differ only as to the time when filed.

Stylized Mark: One type of depiction of the mark sought to
be registered. Another name for this type of mark is “special form.” If the
mark includes a particular style of lettering, or a design or logo, the mark is
considered to be stylized or in special form. Therefore, applicants must select
the "stylized or special form" mark format when applying for these
types of marks. The mark in special form
must be a substantially exact representation of the mark as it appears on the
specimen or on the foreign registration, as appropriate.

Standard Character
Format: An applicant may submit a
standard character format representation of a mark if (1) All letters and words
in the mark are depicted in Latin characters; (2) all numerals in the mark are
depicted in Roman or Arabic numerals; (3) the mark includes only common
punctuation or diacritical marks; and (4) the mark does not include a design
element.

Suggestive Mark: A mark that, when applied to the goods or
services at issue, requires imagination, thought or perception to reach a conclusion
as to the nature of those goods or services.
Suggestive words are acceptable for registration (e.g. “Nutrasweet” for
artificial sugar).

Trademark: A word, name, symbol or device that is used
to indicate the source of goods and to distinguish them from the goods of
others.

Trademark Act: Title 15 of the United States Code
(USC). The major body of U.S. law that
governs federal registration of trademarks.

registered and dead federal trademarks. TESS is free and intended for use by the
general public.

Trademark Manual of
Examining Procedure (TMEP): A reference
work on the practices and procedures relative to registration of marks in the
USPTO. It contains guidelines for USPTO
examining attorneys, trademark applicants and owners, and attorneys and
representatives for trademark applicants and owners.

Use in Commerce: For the purpose of obtaining federal
registration, "commerce" means all commerce that the U.S. Congress
may lawfully regulate; for example, interstate commerce or commerce between the
U.S. and another country. "Use in commerce" must be a bona fide use
of the mark in the ordinary course of trade, and not use simply made to reserve
rights in the mark.

Thursday, July 2, 2015

Professor Eric Goldman posts a timely reminder that online service providers (which for this purpose includes a person or entity that operates a web site where any third party content might be incorporated) need to make sure they have a current designated agent form on file with the Copyright Office.

As of now, it appears that the Supreme Court does not have a patent case on its docket for the upcoming term. As a matter of public policy, some argue that changing too many aspects of patent law at once results in a far higher risk of unintended consequences (I agree with that position).

Of course, the Supreme Court can always decide to take a case later, but at this point it look like the action on patents take place on Capital Hill (and in the Federal Circuit Court of Appeals as they try to figure out how to harmonize and understand all of the Supreme Court's recent decisions).

Tuesday, June 30, 2015

Patent law has a steep learning curve. For patent lawyers, this means reading a lot of federal court decisions and attending seminars. For inventors, this learning curve can impede our ability to get patent protection. By creating an inventor's glossary, we hope to make patents and interacting with patent lawyers a bit less complex to the average inventor.

Note that this is a glossary that will grow over time, so please forgive the initial shortness of the list.

America Invents Act: This 2011 statute, sometimes called the "AIA", made significant changes to U.S. patent law. The AIA switched the United States from a "first to invent" system to a "first to file" system. The AIA established a new "Inter partes review" procedure. The AIA switched made changes to the administrative appeal process, including changing the name of the appeals board from the BPAI ("Board of Patent Appeals and Interferences") to the PTAB ("Patent Trial and Appeal Board"). The AIA created a "covered business method" review process for certain financial-related patents.

Best Mode: The inventor is required to disclose what the inventors believes to be the best mode of practicing the invention. The AIA eliminated the Best Mode requirement as a basis for invalidating an issued patent in later court proceedings or post-grant review proceedings. The USPTO may reject a pending patent application for failure to identify the best mode.

Claims: The claims are the section of the issued patent that define what the inventor's monopoly covers. If Henry Ford had filed for a patent and described the entirety of a car, but the claims only described the suspension system, none of the other parts of the car would be patented. It is common practice in complex inventions to seek protection for elements not covered by the granted claims by filing a continuation application.

Continuation: Prior to issuance or abandonment, the inventor or assignee of the patent may file a continuation application. The continuation application cannot introduce new matter (this may be done as a continuation in part), but may seek claims that cover parts of the invention not previously claimed.

FITF: See First Inventor to File.

First Inventor to File: This is a system whereby the patent for an invention is issued to the first inventor who gets an application on file with the relevant patent office. This is the system in place throughout all or almost all patent offices in the world. The United States changed over to this system from a first to invent system effective March 16, 2013 as part of the changes implemented in the AIA.

First to Invent: This is the system that the United States followed until March 16, 2013, when the AIA first to invent provisions took effect. Under this system, inventors typically kept invention notebooks or other documents to prove their invention date. Subject to a lot of other limitations (such as not publishing the invention more than a year prior to the filing date), the first person to invent got the patent even if another inventor filed with the USPTO first.

MPEP: This is the Manual of Patent Examining Procedure, the book of rules that patent examiners and patent lawyers use to determine, among other things, how to conduct themselves and how to go about getting a patent issued.

Myriad: This refers to Assn. for Molecular Pathology v. Myriad Genetics, Inc., a 2012 United States Supreme Court case. The case held that a naturally occurring DNA segment is a product of nature and not patent eligible merely because it has been isolated. However, cDNA, which is not naturally occurring, is patent eligible. Of interest, cDNA is the same as the naturally occurring DNA except that it omits portions within the DNA segment that do not code for proteins. This case expanded on the "law of nature" exception to patentability. The case invalidated patents related to the BRCA1 and BRCA2 genes, which are highly predictive of breast and ovarian cancer risk.

Non-Final Rejection: This is a rejection of some of the patent claims in a pending application, but in such a case the applicant has a right to get a second office action (usually either an allowance or a final rejection) in response to the inventor's reply to the non-final rejection.

Novelty: A patent is not available under Section 102 if "the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention", or described in another person's previously-filed patent application. Note that novelty does not require that the invention be used for the same thing as the current inventor's proposed use. For example, if an inventor develops an improved needle for closing surgical incisions, but unknown to the inventor, a sewing machine company across the country is selling an identical needle but for use in clothing, novelty bars a patent for the surgical use of that needle, even if it would not be obvious to one skilled in the art to use the sewing needle improvements in a surgical setting.

Obviousness: Even if an invention is novel, it is not patentable under Section 103 if "the differences between the claimed invention and the prior art are such that the claimed invention as a whole would have been obvious before the effective filing date of the claimed invention to a person having ordinary skill in the art to which the claimed invention pertains." Under this section, it is common for patent examiners to combine numerous references to construct a case for obviousness. If the inventor is able to overcome a Section 102 novelty rejection, the patent examiner will often fall back to a rejection based on Section 103 obviousness.

PAIR: See Public PAIR and Private PAIR.

Private PAIR: Private PAIR is a portal that patent lawyers and self-represented inventors can use to monitor the status of the U.S. patent applications associated with their account, whether or not the applications are published.

Public PAIR: Public PAIR is a portal that members of the public can use to monitor the status of published U.S. patent applications.

RCE: See Request for Continued Examination.

Request for Continued Examination ("RCE"): When a patent has received a final rejection, the applicant typically has at least three options: (a) appeal; (b) abandon the application, potentially in conjunction with filing a continuation; or (c) file an RCE. An RCE filing returns the application to "Ready for Examination" status. If the inventor attempted to amend the claims after the final rejection and got an "advisory action" in response, the first office action on an RCE must be a non-final rejection. Otherwise, the examiner may choose to make the initial office action in an RCE a final rejection.

Section 101: This refers to section 101 of title 35 of the United States Code (35 U.S. Code § 101 - Inventions patentable). Section 101 can be thought of as a gateway every invention must pass in order to be patentable. While the text of the section is short and simple ("Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title."), numerous judicial decisions have created additional exceptions to patentability. For example, after Alice, an invention that implements an abstract idea without substantially more is not patent eligible under Section 101.

Section 103: This refers to section 103 of title 35 of the United States Code (35 U.S. Code § 103 - Conditions for patentability; non-obvious subject matter). This section requires that an invention not be obvious in order to be patent-eligible. See Obviousness.

Section 112: This refers to section 112 of title 35 of the United States Code (35 U.S. Code § 112 - Specification). This section describes what must be present in a patent application. The inventor must provide a written description enabling a person skilled in the art to make the invention (see Written Description) and must disclose the best mode for carrying out the invention (see Best Mode).

Written Description: This is a requirement created by Section 112(a). Under this requirement, the written description in the patent application (excluding the patent claims themselves) must describe the invention that the inventor seeks to protect in the patent claims. Each element of the claims must find support in the written description.

Monday, June 29, 2015

The case is a bit complicated, particularly for non-programmers, but it basically asked whether copyright law covers application programming interfaces, or "API"s. The District Court originally found that an API could not be copyrighted. The Federal Circuit disagreed on appeal, holding that "the declaring code and the structure, sequence, and organization of the API packages are entitled to copyright protection."

This is good news for Oracle (as they won) and for companies that develop software with APIs that they wish to limit access to. This is bad news for the open source/free software movement. It will also probably make standardization of APIs across similar software packages more difficult.

After the Alice Corp. v. CLS Bank decision in 2014, the limits for software patentability are, put bluntly, very unclear. Worse, the direction that the Court will take in future cases is even less clear. Had the Supreme Court granted Google's request and gone on to hold that copyright law does not cover APIs, and if the Supreme Court continued the nearly annual tradition of limiting the types of things that are patent eligible, it is possible that APIs would have been ineligible for any kind of IP protection.

There is a broader lesson here: Many types of innovation are eligible for more than one kind of legal protection. For example, the Google v. Oracle suit originally involved both copyrights and patents. Had Oracle relied only on patents, they would have lost. The lesson for innovators seeking to protect their innovations against infringement is that they should rely on as many different kinds of IP protection as are available. After Google v. Oracle, the patent/copyright combination seems a wise path for software.

Saturday, June 27, 2015

It is a common problem businesses face: You are going about your day, providing great customer service, when you notice a bad review pops up on Yelp (or Google+, or Amazon, or any of the infinite places people post things online).

-- (Note that I am discussing general rules, and this article is not to be construed as legal advice; for that, you need to retain a lawyer) --

For reasons I will explain below (and to avoid having to pay lawyers), often the best thing is to try to get the person who posted the review to change or remove it, or to convince the web site to voluntarily remove the post. If you can't convince either one, then you will want to look at your legal options.

What if what they are saying is true?

When somebody posts a bad review or something else critical of you, your first hurdle is the First Amendment. Defamation law (slander for spoken words, libel for written words) can be complex, but there is at least one hard and fast rule in the United States: Truth is an absolute defense. No matter how embarrassing you may find a review saying that there was a roach in the sandwich you served a customer, if there was in fact a roach, you have no case. There are some narrow exceptions, so if you have questions, and particularly if you have some agreement with the other party that limits what they can say (such as a non-disparagement clause or a non-disclosure clause), you should definitely see a lawyer.

The rules relating to defamation do vary in other countries, so it may be possible to sue over truthful statements in those courts. However, note that there is a U.S. law, the SPEECH Act, that prohibits enforcing foreign defamation judgments in the U.S. unless the foreign courts provided the same free speech protections as a U.S. court would have provided. So while there is a route to sue over damaging but truthful speech, it is a very narrow, expensive, and likely fruitless route (definitely financially fruitless if the person doing the defamation lives, with all of their assets, in the United States).

What if they are lying?

In California, libel and slander require a false, defamatory publication that is unprivileged and has a natural tendency to injure or that causes special damage. There are some complexities, but if the posting seems likely to meet those requirements, it is a good idea to retain a lawyer and learn your options.

There are two problems that permeate a lot of online defamation issues. First, a lot of online defamation is done anonymously, so it is not easy to track down who posted it. A lot of internet service providers keep access logs, and a lawyer can file suit against a "John Doe" and subpoena those records -- but in this case, delay is not your friend. Access logs can get very big, and it is a common practice for service providers to delete those logs after they reach a certain age.

The second problem is less specific to online posting, but does seem to occur more often in that context: Even if you find out who posted it and you are able to get a court judgment against them, you may not be able to collect. In addition to local defendants who just do not have the assets to pay a judgment, online defamation often involves international disputes. For example, if a person in Turkey posts a defamatory statement about your eBay business online, you may be able to get a huge judgment against them, but good luck collecting.

A good lawyer can help you figure out if it makes financial sense to pursue claims. A tech-savvy lawyer can help you identify the party who posted the defamatory review and do an asset search on that party. Based on those results, your lawyer can help you decide whether it makes sense to pay the fees involved in suing the posting party.

Why don't I just sue Yelp (or another service provider)? A Tale of Two Defamers:

In 1996, Congress passed the Communications Decency Act. While portions of that act were held unconstitutional,section 230 survived. Section 230(c)(1) provides as follows: "No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider." Because of the Supremacy Clause to the Constitution, Section 230 preempts state laws, including those on defamation. While there have been numerous Section 230 cases, many lawyers still seem to be unaware of the broad immunity this federal law provides. For both plaintiffs and defendants, ignoring Section 230 is a terrible mistake.

Section 230 was intended to promote the growth of the internet and internet companies. Without it, for example, Facebook would have to police every one of the billions of posts users have made. The result of Section 230 is that republication of the very same defamatory statement is actionable in one context, but not actionable in another. Consider, for example, the following review:

John Doe: "I recently visited Jim's House of Pancakes, Waffles and Bananas. I couldn't believe it when Jim himself walked out to serve my food. He has syphilis, and had his hands all over my food! Then, when I bit into my pancake, I chipped my tooth on a rock. Then, when I paid with a credit card, he fraudulently charged my card an extra $100. Avoid this store!"

Assuming that Jim is healthy and didn't manhandle the food, no rock was ever in the pancake, and there was no credit card fraud, this meets the definition of slander just about everywhere. Indeed, the statement itself is slander per se, and under any circumstance the person who posted the review can be sued. But what if that person cannot be found, is overseas and beyond the reach of United States courts, or has no money to pay a judgment? The obvious answer would seem to be to go after the publisher of the review -- but for that, the critical question is where the review was published.

Imagine that John Doe submitted the review to a printed-on-paper newspaper and to Yelp, and the review was published in both places. Section 230 does not apply to the newspaper, and under the right circumstances, the newspaper can be held liable for the falsehoods in John Doe's review.

Yelp, however, as an "interactive computer service", enjoys the protection of Section 230. Applying the language of that statute is pretty easy: "No provider or user of an interactive computer service [i.e. Yelp, which provides an interactive computer service] shall be treated as the publisher [even though it published the statement just like a newspaper did, it cannot be legally treated as the publisher] or speaker of any information [i.e. the information in the review] provided by another information content provider [in this case, John Doe would be the information content provider]."

So there it is. The same review published by different information providers, even reaching the same audience, yields vastly different results.

Note that Section 230 is not a blank check for information providers. If they created the review themselves, for example, they have no immunity. Federal criminal law is not preempted, copyright law is exempt (although the DMCA does provide an exemption if they quality), and there are other exceptions. So service providers still have to worry about certain aspects of what their customers post, but truth is generally not one of those aspects. That said, Section 230 is a United States law, and does not apply in other nations, so service providers still need to be aware of the extraterritorial risks of not retracting false reviews.

So what do I do? Those reviews are really hurting my business.

In probably the worst legal marketing strategy ever, my standard approach is to talk potential clients through how to approach service providers and get them to voluntarily remove false reviews. Just like people would not go to a lawyer or doctor who has been repeatedly sued for malpractice, consumers will stop relying on sites that are filled with fake and false reviews or information. So in most cases, the service provider's interests are the same as the victim's: Keeping false information off of their site improves both the provider's business and the victim's business. In a case where the client has a good shot at resolving the matter without incurring legal fees and without prejudicing their position, a good lawyer will provide the client with that information.

There are some sites that refuse to take down any bad information, even if they know it is false. If the victim has no luck convincing the provider to take down bad information, or is dealing with a provider that has a policy against taking down any information, true or false, there are strategies that can be employed. But at that point, it becomes difficult to make progress without a tech-savvy lawyer. For example, because the person who posted the information is not immunized by Section 230, it is possible to sue the posting party as an anonymous defendant and then use a subpoena to get logs and other user information from the service provider that can be used to identify the posting party. Once we have the actual identity of the posting party, it is possible to sue them and get them to take the review down themselves.

Even in cases where the posting party cannot be identified by name or is identified but lives in another country, there are strategies that can be employed to attempt to get the review taken down. Section 230 is broad, but with a good lawyer all hope is not (always) lost -- although the options and strategies depend strongly on the facts of the individual case.

The bottom line is that if you talk with a lawyer about online defamation and they aren't immediately familiar with Section 230, you probably want to reconsider your choice of lawyer.

Monday, June 22, 2015

The Supreme Court decided Kimble v. Marvel Entertainment, LLC today. The holding is simple: The Court refused to change a rule they announced in the 1964 Brulotte case, holding that a patent holder cannot charge royalties for the use of his invention after its patent term has expired.

The patent at issue, 5,072,856, covers a toy that allows users to pretend to be "Spiderman" by enabling them to shoot pressurized foam string that looks like a web. The inventor filed for a patent on May 25, 1990 and the patent issued 19 months later, on December 17, 1991.

In a sadly common sequence of events, the inventor met with the president of Marvel to try to sell or license his patent. Marvel declined to buy or license the patent, but did start marketing their own toy -- the suspiciously similar "Web Blaster" that lets users shoot foam webs. This eventually led to the inventor suing Marvel for patent infringement in 1997.

That litigation was settled by Marvel's purchase of the patent for around half a million dollars (presumably to cover past infringement) and a 3% royalty on Marvel's future sales of the Web Blaster. There was no sunset date on the royalty stream. The lower courts followed the 1964 rule and held that royalties expired when the patent expired. The Supreme Court took the case to decide whether Brulotte should be overturned.

The Supreme Court today declined to overturn Brulotte. The Court recognized that the rule might interfere with things that both the infringer and the patentee desire, like spreading payments out over time or allocating the risks and rewards associated with commercializing inventions. However, the Court held, "parties can often find ways around Brulotte, enabling them to achieve the same ends."

This is where it gets interesting: The Court provides an array of workarounds for inventors and licensees to avoid the very result that it imposed on Kimble in today's case:
- The parties can "defer payments for pre-expiration use of a patent into the post-expiration period";
- The parties can enter into a "licensing agreement [that] covers either multiple patents or additional non-patent rights. Under Brulotte", the Court held, "royalties may run until the latest-running patent covered in the parties' agreement expires."
- The parties may contract for "post-expiration royalties ... so long as tied to a non-patent right -- even when closely related to a patent.... That means, for example, that a license involving both a patent and a trade secret can set a 5% royalty during the patent period (as compensation for the two combined) and a 4% royalty afterward (as payment for the trade secret alone)." (Note that it is tough to reconcile patent law's command that the inventor teach the public how to make the invention with the idea that the inventor has withheld a related trade secret that could be licensed).
- The Court also suggests that parties enter into business arrangements other than royalties, such as joint ventures, as a way of giving the inventor an interest that lasts beyond the patent expiration.

The Court then quotes a SpiderMan comic book (seriously, they do) as part of their justification for not overturning Brulotte: The power to overturn established precedent should be used sparingly, because, as the comic book says, "In this world, with great power there must also come -- great responsibility".

Implicit in today's case is the risk that if a patent gets invalidated, the Courts will hold that the royalty stream must cease. That is, patents can expire on their own (which is the case the Court was looking at) or they can be declared invalid before the expiration date. With regard to the latter, much has changed since Brulotte was decided 50 years ago:

- The internet and search engines have made finding prior art to invalidate a patent far easier. No longer must one hire a team of experts to comb through dusty library shelves. Google is even developing a tool that they hope will find invalidating prior art automatically.
- The America Invents Act has unleashed powerful new method to invalidate patents via an administrative tribunal, tribunals which have been so aggressive in invalidating patents that the former Chief Judge of the Federal Circuit Court of Appeals has called patent "death squads".
- Patents that impact financial services are subject to a special second review as a "covered business method" under the America Invents Act.
- Infringers have become far more aggressive in using ex-parte reviews and inter-party reviews to attack patent validity.
- The numerous recent Supreme Court cases changing the standards for what is patentable has caused infringers to question -- and challenge -- the validity of many patents that they would simply have licensed a decade ago.
- Medimmune, Inc. v. Genentech, Inc. was decided, holding that a licensee of a patent can challenge the patent's validity without breaching the license agreement.

While it is easy to adjust to the rule upheld in Kimble today with regard to patent expiration (just follow one of the Supreme Court's "workarounds"), application of the Brulotte/Kimble rule to the risk of patent invalidation is much more complex.

As a practical matter, small companies and independent inventors usually have a disproportionate amount of their net value tied up in a few patent assets. In a world where the Supreme Court and Congress are shifting the patent landscape with surprisingly aggressive and frequent acts, the question of who bears the risk of patent invalidity, where the patent is the independent inventor's largest single asset, is a critical one. Typically, patent purchase price is negotiated with the risk of invalidity in mind. That is, the inventor will sell for less (in many cases, far less) than the true value of the patent because even a 10% chance of invalidity represents a 10% chance of the inventor's largest asset becoming valueless. If a middle class independent inventor is holding a patent worth $10 million, and the inventor's lawyer estimates the chance of having the patent invalidated in a lawsuit at 10%, it would be tough for the inventor to turn down an offer for $1 million. $1 million in the pocket is, for many independent inventors, far preferable to a 90% chance of winning $10 million in five years (and a 10% chance of getting nothing).

Since independent inventors and small companies often sell patents at a steep discount to shift the risk to the purchaser, it is critical that the purchase and sale agreement for the patent not leave the inventor holding the risk. This is precisely where Kimble case meets modern patent law's steeply increased risk of patent invalidity.

Patent purchase and sale agreements can be structured in a way that protects the inventor against this kind of risk. The easiest approach is to sell the patent for a fixed amount of money with no future royalties. This may not work well where the purchaser cannot afford to pay that amount in a lump sum, or where the purchaser is not sure that the invention will be commercially viable (so wants the inventor to share the risk of commercialization).

In that kind of case, one might assess a purchase price for the patent that reflects the actual value of the patent (for example, $10 million), require some amount to be paid up front (say, $1 million), and then tie the payout of the remaining $9 million to product sales (i.e. 3% of the gross sales are paid annually until the remaining $9 million is fully repaid). This decouples the patent license fee (which is fully paid up front) from the stream of payments (which now takes the form of repayment of the original lump sum licensing fee).

There are plenty of other ways to deal with the Brulotte/Kimble rule, but the one way that doesn't work is to ignore it. There is no substitute for good legal advice, and a lawyer well versed in the various risks that inventors and patents now face should be able to structure the deal in a way that avoids Stephen Kimble's very unpleasant surprise.